Weekly Economic Report 5.23.25

It has been a light week for economic data, so the main focus has been on the House’s big, beautiful bill, which increases already rising future US federal government deficits even further. That has rallied equity markets as their attention shifted to tax cuts and fiscal stimulus, while the fixed income markets worried about the swelling US debt, and pushed the ten-year note as high as 4.60% and sparked discussions of a run to 5%. So, heading into the long weekend, President Trump has recommended 50% tariffs on the EU (and 25% on Apple), introducing a more interesting topic for Sunday talk shows. No one can really take the 50% EU target seriously after the bluster and retreat during the Chinese negotiations (and he delayed to July 9th late Sunday), but it does elevate discussions on EU restrictions for agriculture and technology that limit US access – as well as defense spending. That thought brings us back to budgets and burgeoning global deficits – and what the world’s bond markets will look like when every nation is borrowing a lot of money, not just the US.

EU05-23-2025.pdf

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